TITLE XXIII
LABOR

Chapter 277-B
EMPLOYEE LEASING COMPANIES

Section 277-B:1

    277-B:1 Purpose. – The legislature recognizes that there is a public need for employee leasing and, therefore, deems it necessary in the interest of the public health, safety and welfare to establish standards for the operation, regulation and licensing of employee leasing companies.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:2

    277-B:2 Definitions. –
In this chapter:
I. "Applicant" means a person seeking to be licensed under this chapter or seeking the renewal of a license under this chapter.
II. "Commissioner" shall mean the commissioner of the department of labor.
III. "Client company" means a person who enters into an employee leasing arrangement with an employee leasing company.
IV. "Employee leasing arrangement" means an arrangement, under written contract, whereby:
(a) An employee leasing company assigns an individual, including an individual who was previously employed by the client company or its predecessor, affiliate, or subsidiary, to perform services for the client company; and
(b) The arrangement is intended to be, or is, on-going rather than temporary in nature, and not aimed at temporarily supplementing the work force.
V. "Employee leasing company" means any person:
(a) Engaged in providing the services of employees pursuant to one or more employee leasing arrangements; or
(b) Who otherwise regularly provides services of a nature customarily understood to be employer responsibilities including, but not limited to, the provision of health insurance plans, workers compensation or retirement or other benefit plans in the name of an entity other than the company on site where the employees provide services.
V-a. "Person" means any individual, partnership, corporation, limited liability company, association, or other legal entity.
VI. "Temporary help service" means a service whereby an organization hires its own employees and assigns them to clients to support or supplement the client work force in special work situations such as employee absences, temporary skill shortages, seasonal workloads, and special assignments and projects.
VII. "Temporary employee" means an individual hired to perform temporary help service.

Source. 1994, 405:1. 1995, 226:14. 1996, 243:1. 2009, 308:1-3, eff. Sept. 29, 2009.

Section 277-B:3

    277-B:3 Rules. – The commissioner shall adopt rules pursuant to RSA 541-A for the conduct of the business and the licensing of employee leasing companies as necessary to carry out the provisions of this chapter.

Source. 1994, 405:1, eff. June 10, 1994.

Section 277-B:4

    277-B:4 Exemptions. – This chapter shall not apply to labor organizations or to this state, the United States or any subdivision or agency thereof. This chapter shall not include temporary help service.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:5

    277-B:5 License Application and Fees. –
I. Every applicant for an initial employee leasing company license shall file with the commissioner a completed application on a form prescribed by the commissioner with a non-refundable application fee of $100. Every applicant for a renewal license shall file with the commissioner a completed application at least 60 days before license expiration together with a renewal application fee of $100. The commissioner shall act upon such renewal application within said 60-day period. A licensee shall pay an annual fee for a license of $500 per year.
II. As a condition of licensure under this chapter, any applicant that is not a resident of, or domiciled in this state shall first be licensed as an employee leasing company in the state in which it is a resident or is domiciled if licensing is required by such state. Such applicant shall pay the application and license fees in paragraph I, or those application and license fees charged by the domiciliary state, whichever are greater.
III. The commissioner may issue a restricted license to an employee leasing company domiciled in another state for limited operation within this state under the following conditions, but only if the foreign jurisdiction has substantially the same conditions for licensure of a New Hampshire domiciled employee leasing company in such jurisdiction:
(a) The applicant does not maintain an office in this state, does not maintain a sales force or have a sales representative in this state, or solicit clients residing or domiciled in this state.
(b) The applicant shall not have more than 100 leased employees working in the state.
(c) A restricted licensee shall pay an annual fee of $100, or a fee in the same amount required by the foreign jurisdiction, whichever is greater.
IV. Every application for an original, renewal, or restricted license, shall be accompanied by evidence satisfactory to the commissioner that the leased employees are covered by workers' compensation insurance issued by a carrier admitted to write such coverage in this state. No unlicensed leasing company shall be provided workers' compensation coverage. An employee leasing company may meet its obligation to provide such insurance for leased employees through no more than 2 policies. When 2 policies are issued, one shall be issued in the voluntary market, and the other shall be issued in the residual market.
(a) Upon request of a client company, an employee leasing company insured in the voluntary market shall request that the carrier of the employee leasing company make available claims data on a client company basis to the National Council on Compensation Insurance.
(b) An employee leasing company insured in the residual market shall only be issued the National Council on Compensation Insurance Multiple Coordinated Policy as approved by the insurance commissioner.
(c) A client company shall be assigned its claims data upon terminating its relationship with an employee leasing company which data shall be used in calculating the client company's subsequent workers' compensation premium.
(d) An employee leasing company may meet its obligation to provide workers' compensation insurance coverage for leased employees through 2 carriers, provided that each client company's leased employees shall be covered by only one carrier and that such coverage shall clearly delineate such client company employees by client company name and federal identification number.
V. The application shall also be accompanied by evidence satisfactory to the commissioner that any health insurance benefits covering leased employees are provided pursuant to the provisions of RSA 277-B:11, II.
VI. Each application for an original, renewal, or restricted license, shall be accompanied by a certification that the applicant does not conduct a temporary help service through the same entity as the applicant's employee leasing company and that both entities do not commingle any financial components of the operations.

Source. 1994, 405:1. 1996, 243:2. 2009, 308:4, eff. Sept. 29, 2009.

Section 277-B:6

    277-B:6 Employee Leasing Company License; Financial Assurances Required. –
I. Every application for issuance or renewal of a license as an employee leasing company shall be accompanied by an audited financial statement prepared by an independent certified public accountant in accordance with generally accepted accounting principles. Such statement shall show a minimum working capital of $100,000. At the time of application for a new license, the employee leasing company shall submit its most recent audit which may not be older than 13 months. Thereafter, an employee leasing company shall file a succeeding audit, performed within 12 months before the date of application or renewal, showing a minimum working capital of $100,000. An employee leasing company with less than $100,000 in working capital at renewal shall have 180 days to eliminate the deficiency. During that 180 days the employee leasing company shall submit quarterly financial statements to the department of labor accompanied by an attestation of the chief executive officer that all wages, taxes, workers' compensation premiums, and employee benefits have been paid by the employee leasing company. As an alternative, an employee leasing company may, as approved by the commissioner, provide a surety bond, irrevocable letter of credit, or securities with a minimum market value of $100,000 to the department. For any employee leasing company whose annual financial statements do not indicate positive working capital, the amount of the bond, irrevocable letter of credit, or securities shall be $100,000 plus an amount sufficient to cover the deficit in working capital.
II. In addition to the requirement in paragraph I, the commissioner may require an employee leasing company to deposit in a depository designated by the commissioner, a bond or securities with a market value, deemed sufficient by the commissioner to assure payment of wages and benefits. The securities so deposited shall include authorization to the commissioner to sell any such securities in an amount sufficient to pay any wages, benefits or other entitlements due a leased employee, if the employee leasing company does not make such payments when due. The commissioner may require such bond or deposit only if the commissioner finds, although not limited to such instances, that the leasing company has had its license suspended, denied, or limited in any other jurisdiction; or that there have been instances where the leasing company has not paid employees' wages or benefits when due, or failed to make timely payment of any federal or state payroll taxes or unemployment compensation contributions when due. Any bond or securities deposited under this paragraph shall not be included for the purpose of the calculation of working capital required by paragraph I.
III. An employee leasing company shall submit to the commissioner, within 60 days after the end of each calendar quarter, a certification by an independent certified public accountant that for such quarter all applicable federal and state payroll taxes have been paid on a timely basis.
IV. The department shall to the extent practical permit by rule the acceptance of electronic filings in conformance with RSA 294-E. Such rule may provide for the acceptance of electronic fillings and other assurance by an independent and qualified assurance organization approved by the commissioner that provides satisfactory assurance of compliance acceptable to the department of labor consistent with or instead of the requirements of this chapter or the rules adopted under it. Such rule shall permit an employee leasing company to authorize an assurance organization approved by the commissioner to act on the employee leasing company's behalf in complying with the licensure requirements of this chapter, including the electronic filings of information and payment of fees. Use of such an approved assurance organization is optional. Nothing in this section shall limit the department's authority to license or terminate licensure of an employee leasing company or to investigate or enforce any provision of this chapter.

Source. 1994, 405:1. 1996, 243:3. 2009, 308:5, 6, eff. Sept. 29, 2009.

Section 277-B:7

    277-B:7 Issuance, Refusal, Suspension or Revocation of License. –
I. The commissioner shall issue a license as an employee leasing company to any person who qualifies for the license under the terms of this chapter. The commissioner may, in addition, refuse to issue a license to any person or may suspend or revoke the license of any employee leasing company as provided in RSA 541-A, when the commissioner finds that the licensee or applicant has violated any of the provisions of this chapter, the rules adopted hereunder, or failed to pay federal withholding tax, unemployment insurance contributions, wages, or benefits when due. If a license is revoked under this section, the commissioner may notify the appropriate client companies of such revocation, and shall notify the client companies of the penalties under RSA 277-B:12, III.
II. An application for license, or renewal, shall be rejected by the commissioner if it is found that any person named in the license application is not of good moral character, business integrity, or financial responsibility, or there is good and sufficient reason within the meaning and purpose of this chapter for rejecting the application for a license or renewal.

Source. 1994, 405:1. 1996, 243:4, eff. Aug. 9, 1996.

Section 277-B:8

    277-B:8 Renewal of License. – Licenses issued pursuant to this chapter shall remain in force for one year from the date of issue, unless the license has been revoked under RSA 277-B:7. If an employee leasing company has been continuously licensed without revocation or suspension for a period of 5 years or more following the effective date of this section, a license shall remain in force for 2 years from the date of issue provided that financial information required under RSA 277-B:6 is submitted to the department on an annual basis. Every licensee shall file an application for renewal 60 days before expiration of its license. The commissioner shall act upon such application for renewal within such 60-day period. In the event that an applicant for renewal shall qualify for a 2-year license, the licensing fee shall be twice the annual amount.

Source. 1994, 405:1. 2009, 308:7, eff. Sept. 29, 2009.

Section 277-B:9

    277-B:9 Employee Leasing Deemed Co-Employment. –
An employee leasing company and a client company shall be deemed co-employers and shall divide employment responsibilities as follows:
I. An employee leasing company shall be solely responsible for:
(a) Paying wages to leased employees. The employee leasing company may rely on initial hiring documentation of wages, ongoing pay change documentation, and reported payroll documentation regarding hours worked or other measured unit of employee compensation received from the client company. An employee leasing company shall not knowingly rely on materially inaccurate information provided under this paragraph.
(b) Preparing and issuing of W-2 forms for leased employees.
(c) Calculating, collecting, and remitting all payroll taxes, including income tax and social security tax, as required by law with respect to leased employees.
(d) Complying with state and federal unemployment compensation requirements, including the reporting of wages paid, making required contributions, and processing claims for benefits on a timely basis as required by New Hampshire law.
(e) Paying for workers' compensation insurance for the leased employees.
(f) Making payments for health or other benefits for leased employees, to the extent the contract calls for the employee leasing company to provide such benefits.
(g) Complying with all laws, rules, and regulations for employee leasing companies under their contract or as required by this state or the federal government.
(h) Paying the tax imposed by RSA 77-E and inclusion in its compensation portion of the base tax those wages paid to its leased employees, unless an election is made pursuant to RSA 77-E:13-a.
(i) Providing to each employee an employee manual outlining the terms and conditions of employment with the leasing company.
(j) Providing an employee grievance system for employees employed by the leasing company.
II. A client company shall be solely responsible for:
(a) Directing and controlling the leased employees as necessary to conduct the client company's business, discharge any applicable fiduciary duty, or comply with any licensure or regulatory or statutory requirement.
(b) The goods and services produced by the client company and its direct and leased employees.
(c) The acts, errors, and omissions of the leased employees committed within the scope of the client company's business or under the direction and control of the client company.
(d) Providing accurate personnel and payroll information, and a record of hours and wages to the employee leasing company and department of labor when requested, as a co-employer on all leased employees as required of employers under RSA 279:27. Notification shall be made in compliance with the signed notice as required by rules adopted by the department.
(e) Complying with all wage and hour laws, including recordkeeping requirements and determinations of exempt and non-exempt status.
(f) Providing a safe workplace to the employees free of all hazards in compliance with the Occupational Safety and Health Act of 1970 and regulations or any similar law. This shall include sole responsibility for compliance with the requirements of RSA 281-A:64 and similar requirements or regulations.
(g) Complying with all laws prohibiting employment discrimination, harassment, and retaliation on the basis of any protected class or characteristic.
(h) Paying all expenses arising from unionization, negotiating collective bargaining agreements, and processing grievances and unfair labor practice charges related to the client company or the leased employees.
(i) Complying with all applicable professional license or bonding requirements pertaining to the client company's business and maintaining professional liability coverage.
(j) Assuming and accepting responsibility for all compensation paid to any employee that is not paid through the employee leasing relationship or reported to the employee leasing company. Responsibility shall include but shall not be limited to all payroll taxes, federal and state taxes, additional premium for insurances including but not limited to workers' compensation insurance, and additional matching contributions if any.
(k) Assuming and accepting all responsibilities, as defined under New Hampshire law, of an employer when hiring or employing individuals separately and not included in the contract with the employee leasing company.
III. The employee leasing company shall notify the commissioner of employment security and the commissioner of the department of labor in writing of all new and terminated client companies within 20 business days of engagement or termination.

Source. 1994, 405:1. 1996, 243:5, 6. 2009, 308:8, eff. Sept. 29, 2009. 2011, 249:1-3, eff. Sept. 11, 2011. 2015, 216:3, eff. July 1, 2015.

Section 277-B:10

    277-B:10 Exclusivity and Vicarious Liability. – An employee leasing company and its client company shall both be entitled to the exclusivity of remedy provisions of RSA 281-A:8, and the employee leasing company shall not be vicariously liable for the actions or omissions of the client company and the client company shall not be vicariously liable for the actions or omissions of the employee leasing company. Nothing in this section shall prohibit any direct contractual liability between the employee leasing company and the client company, nor shall the same limit any liability or responsibility imposed by this chapter.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:11

    277-B:11 Employee Benefits and Other Insurance. –
I. An employee leasing company may sponsor and maintain employee benefits and welfare plans for its leased employees. Nothing in this section shall require an employee leasing company to provide comparable benefits to employees located at different work sites.
II. An employee leasing company that provides health insurance benefits to its leased employees shall only provide such benefits:
(a) Through a policy issued by an insurance carrier admitted to write such coverage in this state; or
(b) Through a plan which has been qualified as a single employer plan under the provisions of ERISA.
III. Notwithstanding the provisions of RSA 277-B:9, employees leased to a client company by an employee leasing company remain the employees of the client company for the purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds and employer's liability insurance carried by the client company. Employees leased to a client company by an employee leasing company are not deemed employees of the employee leasing company for purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds or employer's liability insurance carried by the leasing company, unless the employees are included by specific reference in the applicable insurance contract or bond.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:11-a

    277-B:11-a Workers' Compensation Insurance; Certification. –
I. Insurance companies providing workers' compensation insurance in the state shall send to the commissioner a certificate of insurance as proof a valid policy exists for all policies written for employee leasing companies.
II. Insurance companies shall notify the commissioner at least 30 days before cancellation of a workers' compensation policy of any employee leasing company. The commissioner shall notify all client companies of the employee leasing company of the cancellation.
III. The commissioner shall revoke the license of any employee leasing company, the workers' compensation policy of which has been canceled. The commissioner shall notify the appropriate client companies of such revocation and shall notify the client companies of the penalties under RSA 277-B:12, III.
IV. A client company retains the statutory obligation of providing workers' compensation coverage for employees that are not provided, supplied, or assigned by an employee leasing company under an employee leasing arrangement.

Source. 1996, 243:7. 2009, 308:9, eff. Sept. 29, 2009.

Section 277-B:12

    277-B:12 Penalties. –
I. No person shall engage in the business of employee leasing nor hold itself out to the public as an employee leasing company without first having secured a license under this chapter.
II. Any person or employee leasing company who violates the provisions of this chapter may be fined by the commissioner up to $1,000 per employee for each day the violation continues. Any funds collected under this section shall be deposited to the department of labor restricted fund established in RSA 273:1-b.
III. Any client company which does business with an unlicensed employee leasing company may be fined by the commissioner up to $1,000 per employee for each day the violation continues. Any funds collected under this section shall be deposited in the department of labor restricted fund established in RSA 273:1-b.
IV. Any such fines or penalties for violations of the labor law of New Hampshire shall be assessed either against the employee leasing company or the client company based upon the commensurate level of control of the worksite and each party's responsibility for compliance with the applicable violation.
V. Any such fines or penalties assessed by the state to an employee leasing company for violations of the labor law of New Hampshire shall specify at which client company the violation occurred. Unless successive labor law violations occur within the same client company, the state shall treat each violation assessed to an employee leasing company for violations at a specific client company as a first violation and shall not aggregate violations at separate client companies to assess additional and successive penalties.

Source. 1994, 405:1. 1996, 243:8, 9. 2009, 308:10, eff. Sept. 29, 2009. 2011, 224:53, 54, eff. July 1, 2011.

Section 277-B:13

    277-B:13 Application and License Fees. – All application and license fees collected by the commissioner under this chapter shall be paid to the treasurer for deposit to the department of labor restricted fund established in RSA 273:1-b.

Source. 1994, 405:1, eff. Oct. 1, 1994. 2011, 224:53, eff. July 1, 2011.

Section 277-B:14

    277-B:14 Conformity. – No person who applies for a license within 6 months after the effective date of this chapter, and whose application is granted, shall be liable for any act, omission or representation which would have been lawful under its license had the license been in effect at the time of such act, omission or representation.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:15

    277-B:15 Commissioner's Investigatory Powers. – If the commissioner has a reliable basis to believe that any licensee is violating the provisions of this chapter, the commissioner shall have the right to review and inspect all of the licensee's books and records during regular business hours at the leasing company's place of business.

Source. 1994, 405:1. 1996, 243:10, eff. Aug. 9, 1996.

Section 277-B:15-a

    277-B:15-a Client List; Confidentiality. –
I. Employee leasing firms shall maintain a list of current and past clients which shall be available for inspection by the department of labor without notice. The list shall be submitted to the labor department on a quarterly basis. Failure to maintain an updated client list shall subject the licensee to a $1,000 fine, and a $2,500 fine and loss of license for a second or subsequent offense if deemed appropriate by the commissioner. Funds generated from fines shall be deposited in the department of labor restricted fund established in RSA 273:1-b.
II. Client lists, license applications, and related materials submitted therewith shall remain confidential except that the commissioner may share such information with other appropriate state agencies on a confidential basis to the extent permitted by state law.

Source. 1996, 243:11. 2009, 308:11, eff. Sept. 29, 2009. 2011, 224:55, eff. July 1, 2011.

Section 277-B:16

    277-B:16 Interference With Collective Bargaining Prohibited. – For purposes of the collective bargaining process, including, but not limited to, the right to organize employee units based upon specific worksites, the employee leasing company shall be bound by the applicable public or private sector labor relations law and responsible for any violations of a collective bargaining agreement covering any of its leased employees to which it is a party. An employee leasing company shall not reassign leased employees to different client companies for the purpose of interfering with the terms and conditions of any collective bargaining agreement or organizational activity. Nothing in this section shall relieve a client company of its obligations under any applicable public or private sector labor relations law.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:17

    277-B:17 Unemployment Contribution Liability. –
I. Until an employee leasing company has been in business for a period of 2 years, including any time prior to October 1, 1994, a client company shall be jointly and severally liable with the employee leasing company for the payment of unemployment contributions as calculated under the provisions of RSA 277-B:9, VI. The written disclosure provided under RSA 277-B:9, VI shall advise the client company of its joint and several liability, if any, under this section.
II. If an employee leasing company is found by the commissioner, after a hearing, to have unjustifiably failed to pay any unemployment contributions when due, the commissioner shall require the employee leasing company to post a bond as a condition of continuing to conduct business in this state. The bond shall be in such amount and upon such sureties as the commissioner shall determine to protect the interest of the affected employees and the state. If the commissioner requires a bond under this section, the commissioner shall forthwith notify the appropriate authorities in any other state in which the employee leasing company is known to be conducting business, that the employee leasing company was subject to such action in this state. The employee leasing company's license shall be suspended, if it does not post a bond required under this section within 5 working days of being ordered to post such bond.

Source. 1994, 405:1, eff. Oct. 1, 1994.

Section 277-B:17-a

    277-B:17-a Tax Credits. – For purposes of determination of business profits tax credits under RSA 77-A, Coos county job creation credits under RSA 162-Q, economic revitalization zone credits under RSA 162-N, or any other available statutory tax credits provided by this state that are based on employment, leased employees shall be deemed employees solely of the client company if an election is made pursuant to RSA 77-E:13-a. A client company shall be entitled to the benefit of any such tax credit arising as the result of the employment of leased employees of such client company. Notwithstanding that the employee leasing company is the W-2 reporting employer, the client company shall continue to qualify for business profits tax credits under RSA 77-A, Coos county job creation credits under RSA 162-Q, economic revitalization zone credits under RSA 162-N, or any other available statutory tax credits. Leased employees working for other client companies of the employee leasing company shall not be counted together. Each employing leasing company shall provide, upon request by a client company, state agency, or department responsible for administration of any such tax credit, employment information reasonably required by such agency or department and necessary to support any request, claim, application, or other action by a client company seeking any such tax credit. This section shall not apply to the administration of RSA 282-A.

Source. 2015, 216:2, eff. July 1, 2015. 2016, 119:1, eff. May 20, 2016.

Section 277-B:18

    277-B:18 Applicability. – Nothing in this chapter shall relieve any client company or employee leasing company from the provisions of any other applicable state law not inconsistent with this chapter or any applicable federal law.

Source. 1994, 405:1, eff. Oct. 1, 1994.